Silver Supply Watch: Solar Panel Use Is Going PARABOLIC

Solar Panel use is growing around the world, and that means a lot of silver is needed for all the renewed ambition. Here’s what it means for silver…

Fresh off the presses is the Renewables 2017 Global Status Report we can see that global solar panel use is going parabolic:

Solar PV was the world’s leading source of net additions to power generating capacity in 2016, with the equivalent of more than 31,000 solar panels installed hourly. At least 17 countries had enough solar PV capacity by year’s end to meet 2% or more of their electricity demand, and several countries saw far higher shares. The year also saw unprecedented price reductions, particularly for modules.

Silver is a key component in solar panel design. Here’s how according to the Silver Institute:

How is silver used in solar cells? Silver powder is turned into a paste which is then loaded onto a silicon wafer. When light strikes the silicon, electrons are set free and the silver – the world’s best conductor – carries the electricity for immediate use or stores it in batteries for later consumption.

It is interesting to note that the REN21 Report was just published today. However, some eleven months ago Reuters was making the case that demand for silver would peak and decline for solar panel use:

“We do expect photovoltaic installations to see stable growth in the coming years — about 3-5 percent per annum — but this does not necessarily cascade to silver demand growth,” GFMS analyst Ling Wong said.

“We expect silver demand use in the photovoltaic sector to fall by 4.5 percent annually.”

Photovoltaic demand for silver took off in 2011, but a jump in prices to nearly $50 an ounce that year encouraged the industry to move away from thick-film technology to thin-film systems that use less silver.

A typical photovoltaic cell generating up to 4 watts used 0.17 grams of silver in 2014, down from 0.3 grams in 2010.

“They’re adding more busbars (metallic strips that conduct electricity) to the cell, which adds more lines but decreases the amount of silver per cell,” said John Smirnow, secretary-general of the Global Solar Council.

“You’re also seeing some investment in replacing silver with copper,” he said.
Of course they would say that. It is in their interest to have a suppressed silver price. Just understand that when they are talking about all of this copper for silver substitution and less industrial use of silver per panel, they are painting only part of the picture. What they are not taking into account is:
  • peaking and now declining silver mine supply
  • higher oil costs pushing up “all in sustaining costs” for mining operations
  • Increased use of solar panels overall
  • Increasing copper costs and decreasing copper mine supply
  • competition from investment demand for silver once investment demand for silver picks back up
  • Increases for other industrial uses for silver such as use in the medical and healthcare industries

Taken as a whole, it is hard to see how all of this solar panel implementation is anything but bullish for silver.

It is, after all, certainly bullish for the solar panel industry: